Microsoft's performance appraisal system and team-based evaluation alternatives

Performance Reviews

How is performance appraisals conducted in this organization?

Microsoft uses a rating system to rank its employees within work teams when conducting performance appraisals. According to one Microsoft employee's blog on the performance appraisal process, Microsoft grades or ranks all of its employees on a curve. "Your rating is based on your ladder level expectations and relative to the performance of your peer group...Woe unto you if you're a super-star in a super-super-star peer group" ("Microsoft's 3.0 (or, How I Learned to Stop Worrying and Love the Curve," 2005, Mini-Microsoft Blog) in other words, employees are not simply evaluated on an individual basis, they are also ranked in relation to their peers, which means that even an excellent employee might receive an average performance rating, if he or she is working with the top talent at the company on a competitive work team

What advice would you provide senior management in the organization about how to conduct performance appraisals?

This particular disgruntled Microsoft employee suggested in his blog: "I have recently been thinking it might be interesting to score teams on their effectiveness as a whole. If we did team reviews as well as individual reviews, and team scores affected rewards, managers would really scramble to get low performers off their teams." ("Microsoft's 3.0 (or, How I Learned to Stop Worrying and Love the Curve," 2005, Mini-Microsoft Blog) in other words, to create better team cohesiveness, rank the team, not the members of the team in relation to other team members. Do not penalize strong performers for being members of strong teams. Lackluster employees would be penalized because no one would want them on their 'team.' Now, there is an incentive to work with weak employees, to boost one's own relative performance rating.